India’s product exports fell by a record 34. 6% in March, while imports fell by 28. 7% as countries closed their borders to combat the Covid-19 outbreak.
In February, product exports recovered by 2. 9% after falling for six consecutive months.
Click here to view the image
Of the 30 most important products in India’s export and import baskets, 29 saw a contraction in March, indicating the severity of the coronavirus pandemic’s effect on global demand. Only iron ore exports (58. 4%) and imports of maritime transport apparatus (11. 9%) registered expansion during the month.
Engineering Export Promotion Council chairman Ravi Sehgal said the sharp drop in product exports was not surprising, as the world’s major economies were in a state of lockdown. “April would be worse because foreign trade, with the exception of medicines and supplies, has almost come to a standstill. Exporters face a question of survival,” he added.
In fiscal 2020, India’s exports rose 4. 8% to $314. 3 billion, while imports declined 9. 1% to $467. 2 billion, leaving an industrial deficit of $152. 9 billion.
The World Trade Organization (WTO) predicts that the global produce industry will fall by 13% to 32% in 2020 due to the Covid-19 outbreak. “The wide diversity of probabilities of the projected drop is explained through the unprecedented nature of this fitness crisis and the uncertainty about its exact economic impact. But WTO economists believe this decline is likely to outweigh the industry crisis caused by the global currency crisis of 2008-2009,” he said last week.
Sharad Kumar Saraf, chairman of the Federation of Export Organizations of India, said that with more than 50% of orders cancelled, gloomy forecasts, gigantic project losses and a backlog of bad loans among export units, the government deserves to immediately announce a contingency. “The huge contribution of various economies to exports will put Indian exports in new difficulties, because when the length of the pie decreases, the festival intensifies by focusing on prices,” he added.
The World Bank, in its latest Economic Focus on South Asia, said lower external demand for manufacturing and facility exports would have an effect on India. “One of India’s biggest exports is business and professional facilities, which comprise business procedure outsourcing (BPO) such as technical support and call centres, largely founded in India. This sector is very affected. Containment measures, both in countries of origin and destination, have forced workplaces to close because their infrastructure is strongly oriented to work in the workplace. There are also fears that external demand will fall precipitously, even beyond the lockdown period, as consumers cut costs. In fact, this scenario will lead to fewer new projects as well as relief in existing projects,” he adds. However, the bank said India’s balance sheet scenario could improve. “Weak domestic demand, weak oil prices and COVID-19 disruptions are expected to reduce the existing account deficit to 0. 2% in FY21 and keep it low in subsequent years,” it added.
Download the Mint app and premium items
Log in to our to save your favorites. It will only be a matter of a moment.